Friday, June 17, 2005

Why Can't I Do This? (What am I missing)

A rash of large settlements lately, some of the Enron ilk (about 4.2 billion over the last few days from Citi and JPMorgan..........all while not admitting any guilt or liability)and a KPMG related one (settling some tax shelter issues which KPMG acknowledged represented "unlawful conduct by former KPMG partners") in which they are seeking to stave off possible criminal charges (as per today's WSJ)

Why can companies (well at least some..........sorry about that conviction Anderson) buy themselves out of trouble, but the average person can't, unless you consider Grubman and Blodget average situations?

Not a lawyer so if someone could explain, it would be great


Anonymous Zach said...

Hey - the blog looks good. I have some (likely mundane) thoughts on this one.

First, you can't unilaterally settle; both sides have to agree.The plaintiffs don't have to give in. They've chosen to do so in light of the circumstances. Really, its up to them.

From a broader, economic viewpoint, I guess you have to look at whether settlements like this are an effective deterrent for this kind of corporate behaviour. Maybe they are; maybe they aren't. But I think that they probably are, and that it probably comes down to the market for corporate control.

That of course doesn't speak to the guys who pull these jobs and get off scott-free. But I think what you want for these guys are criminal charges like these.

8:20 PM  
Blogger Josh Kerbel said...

Of course, I just don't see why some of these companies are given the option of simply cutting a cheque.

Why is a bank, no matter how large, exempt from standards of conduct that that the rest of us have to abide by?

On top of it, they get to settle the issue by using shareholder money. While you can argue that the shareholders benefited from the upside of these transactions, management and the employees were the ones who set the deals up. They should have some personal liability. Citibank and JPMorgan did not choose to do what they did with Enron, the management of the companies did. Companies are simply pieces of paper. It is really time to start peircing the corporate vail.

9:11 AM  

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